In the report, Nomura noted, “We want to address a concern we have recently been hearing from investors on the capex and opex implications of Google Fiber, which we believe would not be as detrimental to Google's financials as they may seem to think. For some context, Google recently announced plans to expand its Google Fiber offering to 34 cities in 9 metro areas, and Google's capex has been increasing rapidly. The main benefits of Google Fiber stem from its Gigabit internet speed.

"We arrive at total capex spending of $3.3bn that we expect will stretch out over a few years, which we believe is not material for Google, given its strong balance sheet and $11.3bn of free cash flow last year. For opex, we estimate an average of $60/month/subscriber, or $720/subscriber annually. Our model reflects our optimism around Google Fiber offerings in the licensing & other revenue line, and we continue to believe that Google's valuation is attractive versus its Internet peers.”